This business is so rife with industry parlance that it sometimes seems we forget there are real human beings involved in the things we do.
Interest and cap rates, property sectors, yield, mezzanine financing, CMBS, alpha, managed accounts, separate accounts, open- and closed-end funds, REITs, indices, portfolios, actuarial underwriting …
Need I go on?
Even when we talk about “demographics” and the “demographic trends” that drive real estate investing decisions, it sounds devoid of flesh and blood.
Then again, sometimes the impact of what we do becomes so immense the human dimension — thankfully — becomes irrepressible. Such was the case when The Economist published an article reporting that in just the past 20 years nearly 1 billion earthlings have been elevated out of extreme poverty. Between 1990 and 2010, the number of those living in the most squalid conditions fell by half as a share of the total population in developing countries, from 43 percent to 21 percent — a reduction of almost 1 billion people.
“Take a bow, capitalism,” says The Economist.
Allow me to horn-in on that toast by inviting institutional real estate investors to also take a bow.
Twenty years of mammoth global investments made by pension funds, foundations, endowments, sovereign wealth funds and the like (as well as the countless people who put institutional real estate money directly to work) have made a major impact in the form of spanking new infrastructure, housing, retail and office centers, as well as overall improved living conditions and wealth creation.
Consider that poverty in all its forms is receding most rapidly within the world’s emerging economies, the very places institutional real estate dollars are aggressively applied.
We have more work to do. There are another billion people awaiting liberation. Of the 7 billion people alive on the planet, 1.1 billion live below the internationally accepted extreme-poverty line of $1.25 a day. The United Nations has begun drawing up a new list of targets to replace the Millennium Development Goals set in place September 2000 and scheduled to expire in 2015, The Economist reports.
At current pace, another billion people could be rescued from the most extreme forms of poverty by 2032. Then again, that’s assuming the blistering pace of technological innovation does nothing to expedite our ability to create wealth and improve living conditions. I rather doubt that. Everything we know about history and technology tells us that improvement in living conditions and wealth creation will only accelerate.
One of the evolutionary process’s major sources of fuel is institutional real estate investment.
So it’s worth repeating: Take a bow, institutional real estate investors. There is real flesh and blood behind all that industry parlance, and the impact you’re delivering is making a real difference in people’s lives.
Not a subscriber to IREI Insights blog? Sign up to receive alerts on new blog posts.
Mike Consol is editor of The Institutional Real Estate Letter – Americas.
